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5 Sector ETFs That Beat the Market in November

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Despite the surge in coronavirus cases, the month of November has been solid for the U.S. stock market with most of the indices hitting a series of new highs. In fact, the major indices are on track for posting their biggest gains ever this month, with the Dow Jones gaining about 13% and the S&P 500 rising 11.3%. If the gains sustain in the last trading session of the month, then Dow Jones will register its best month since January 1987 while the S&P 500 post its best performance since April. The Dow Jones has crossed its major 30,000 milestone on bullish sentiments.

The rally primarily came on a vaccine development and the prospect of a divided government. This is because a vaccine is being viewed as “a beginning to the end” of the coronavirus pandemic, and the divided congress is considered favorable for the economy with lesser chances of major tax increases and tighter regulations. The prospects for a smooth transition of Biden to White House has been improving, thereby bolstering further confidence in the market. Further, better-than-expected earnings also propelled stocks higher.

The combination has led to market rotation with investors flocking to cyclical sectors that would benefit from a rebounding economy. As the cyclical sectors are tied to economic activities, these outperform in a growing economy. As such, energy has been at the forefront of the rally in November, gaining 33.7% while financials and industrials have gained 19% and 17%, respectively. On the other hand, the long-held investors’ love for big tech and Internet names has faded (read: Cyclical Sector Outperforming: 6 Cheap ETFs to Track).

Given this, we have highlighted a few ETFs that have outperformed the market in November and could be better plays if the trend prevails.

VanEck Vectors Oil Services ETF (OIH - Free Report) - Up 54.4%

Vaccine optimism will lead to a swift recovery in energy demand next year, thereby providing a lift to the energy stocks. Additionally, the expectation that OPEC and its allies will delay an increase in production planned for January have also added to the strength. While most of the energy ETFs outperformed, OIH stole the show. This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. With AUM of $664.7 million, it holds 25 stocks in its basket and charges 35 bps in annual fees. The product trades in volume of 448,000 shares per day and has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Energy on Track for Its Best Month Ever: 5 ETF, Stock Winners).

Amplify Seymour Cannabis ETF (CNBS - Free Report) – Up 50.5%

Joe Biden's lead in election reflects a major boost for the U.S. cannabis industry. This is because democrats have committed to decriminalize marijuana at the federal level in the United States if they win. Additionally, five states legalized marijuana through ballot measures. With AUM of $11.7 million, CNBS is an actively managed portfolio, which invests in 80% of its assets in securities of companies with 50% or more of their revenues from the cannabis and hemp ecosystem. The fund holds 23 securities and charges 75 bps in annual fees. It trades in an average daily volume of 23,000 shares (read: Should You Buy Cannabis Stocks & ETFs Now?).

Invesco WilderHill Clean Energy ETF (PBW - Free Report) – Up 50.3%

The clean energy space has been soaring on president-elect Joe Biden’s proposal to build a green and clean infrastructure. Biden intends to pump $2 trillion into green energy over four years to build solar panels, charging stations and more; rejoin the Paris climate in “exactly 77 days;” and ensure net-zero emissions by 2050. PBW provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds about 46 stocks in its basket. The fund has AUM of $1.6 billion in its asset base and charges 70 bps in annual fees. It trades in an average daily volume of 470,000 shares (read: 5 Must-Watch ETF Charts After Q3 Earnings).

ETFMG Travel Tech ETF (AWAY - Free Report) – Up 42.6%

Hopes that the vaccine might take life back to normal and boost travel demand have sent the travel stocks soaring. This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 27 stocks in its basket. AWAY has accumulated $40.5 million in its asset base and trades in an average daily volume of 470,000 shares (read: Biggest ETF Winners from Coronavirus Vaccine News).

VanEck Vectors Rare Earth/Strategic Metals ETF (REMX - Free Report) – Up 39.2%

Rare earth metals got a boost from the expectation that economic recovery will drive the demand for these metals. REMX offers exposure to companies engaged in producing, refining and recycling of rare earth and strategic metals and minerals. It follows the MVIS Global Rare Earth/Strategic Metals Index, holding 21 stocks in its basket. The ETF has AUM of $241.4 million and an average daily volume of 178,000 shares. From a country look, Chinese firms dominate the portfolio with 43.7% share, closely followed by Australia (28.1%) and United States (10.1%). The product charges 60 bps in annual fees.

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